Cannabusiness Advisory

In Case You Missed It: Recent Federal Developments Signal Forthcoming Hemp-Industry Guidance

August 12, 2019


On Thursday, July 25, 2019, the Senate Agriculture Committee held a hearing before federal regulatory agencies in the agriculture, public health and pesticides space concerning efforts to implement the legalization of hemp. Representatives from the U.S. Department of Agriculture (USDA), the Environmental Protection Agency (EPA) and the Food and Drug Administration (FDA), among others, were invited to attend. The hearing was an effort to provide “certainty and predictability for farmers,” stated Pat Roberts, Chairman of the Agriculture Committee.

Why was this hearing needed?

The passage of the Federal Agriculture Improvement Act of 2018 (the “2018 Farm Bill”), which was signed into law by President Donald Trump on December 22, 2018, took monumental steps to remove several federal prohibitions on the U.S. hemp industry. For instance, the 2018 Farm Bill legalized the cultivation and distribution of hemp, defined as any part or derivate of the cannabis plant with 0.3 percent or less of tetrahydrocannbinol (THC).

However, while the Farm Bill provided some regulatory framework at the federal level for the cultivation of hemp, it did not resolve all uncertainty as to the FDA’s regulatory authority. In addition, there is still unrest as a result of ongoing concerns and roadblocks faced industry participants in accessing financial services involved with hemp and its derivatives, including being denied credit lines and insurance policies as a result of lack of guidance from federal regulators.

The Agriculture Committee hearing demonstrated bipartisan support for hemp and further guidance and a reflection of shared political interest. The industry’s anticipation for further regulatory relief was recognized in the testimony of Doctor Amy Abernethy, the Principal Deputy Commission of the FDA, who stated that the multi-year process for the development of regulations “is a long time to wait for regulatory clarity, particularly given the significant public interest in hemp products, and CBD in particular.”

The hearing follows shortly after the FDA’s announcement of forthcoming regulations on CBD as a food additive. The FDA maintains regulatory authority under the Food, Drug and Cosmetic Act (FDCA) over the addition of hemp and its derivatives, including CBD to conventional food and beverage products, dietary supplements cosmetics and other products introduced in interstate commerce within FDA jurisdiction. On July 12, 2019, the Principal Deputy Commission of the FDA, Amy Abernathy, M.D., Ph.D. announced that the FDA expects to expedite the development of regulations specific to CBD, with the issuance of a progress report by early Fall of 2019. This provides some relief to hemp industry participants considering the FDA’s current position prohibiting CBD and other cannabinoids from being added to food and dietary supplements under the FDCA. The FDA has demonstrated its position through a series of warning letters to companies adding CBD to dietary supplemental and similar products including, making health claims related to CBD on their products.  The anticipation by hemp operators for further clarity is mirrored by Senator Ron Wyden’s recent letter to the FDA urging the agency to issue formal guidance announcing a CBD enforcement policy and pressure from Congress to act expeditiously in development regulations on the sale, distribution, and use of CBD at the federal level.

As we wait to see what new developments may progress for hemp at the federal level, states continue to release hemp programs and licensing rule-making of their own. For example, Ohio’s Governor Mike DeWine recently signed into law the Senate Bill 57, legalizing the cultivation of hemp and the sale of CBD products in the state. Similarly last month, Florida established a state hemp program within the Florida Department of Agriculture and Consumer Services (FDACS) and taking one step closer to authorizing hemp production. The FDAC is now tasked with development regulations for licensure, cultivation and sale of hemp within the state.

States, however, have struggled to find the appropriate balance between consume protection and freedom to advertise a booming hemp-derived CBD market without federal guidance on regulation of products containing CBD. Some states, like Massachusetts and New York, attempted to provide some clarity by taking a stance against the sale of CBD-infused products in response to the FDA’s warning letters.  But until the expected direction from the FDA is provided, uncertainty will continue to persist around how such products containing CBD can be labeled, marketed and advertised both federally and state-wide.

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